Alrosa Sales Steady in First Results for over a Year

Alrosa’s revenue increased slightly in the first half of 2023, but the Russian miner was allowed to withhold key information about the destination of the diamonds it sold.

The company has released its first results statement since March 2022, when it stopped publishing after the war in Ukraine cut off the business from much of the global industry. The February 2022 invasion led to Western sanctions on Russian diamonds — measures that remain in place.

Sales increased marginally to RUB 188.16 billion ($1.9 billion) for the six months, from RUB 187.88 billion ($1.9 billion) a year earlier, the company said Monday in the Russian-language report. Profit slid 35% to RUB 55.57 billion ($562.5 million).

First-half revenue was also higher than the RUB 181.76 billion ($1.84 billion) Alrosa reported for the same period of 2021, before the sanctions happened.

For the second quarter of 2023, revenue climbed 8% year on year to RUB 92.51 billion ($936.5 million), while profit dropped 25% to RUB 27.07 billion ($274 million).

However, the company left out the usual sections about segmented revenue, citing a July 4, 2023, government decree permitting listed companies to limit their publication of information if releasing it could lead to restrictive measures by foreign states.

The omitted figures include a breakdown of overseas and domestic sales as well as details on revenue by location of customer, which usually show Belgium, the United Arab Emirates (UAE) and India to be the largest buyers.

The destination of most Russian rough since the sanctions began remains unclear, with Antwerp, Dubai and Surat being cited as possible markets in the past.

While the US banned direct imports of Russian diamonds and imposed sanctions on Alrosa, the European Union (EU), India, China, the UAE and other key markets did not. In addition, polished diamonds originating from Russian rough but manufactured elsewhere are technically legal in the US under a principle called “substantial transformation.”

India’s imports of rough diamonds from Russia jumped 46% year on year to $1.2 billion in the 12 months that ended March 31, 2023, according to data on the website of India’s Gem & Jewellery Export Promotion Council (GJEPC). For the previous fiscal year, imports rose 15% to $818 million.

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Alrosa also did not state how much revenue came from diamonds and how much from other businesses such as transportation, or include information on transactions with related parties.

The company “considers its current liquidity position to be sufficient for sustainable operations” but cautioned that “sanctions pressure on the company and increased market volatility” could affect this in the future. The report noted the “impact of adverse geopolitical and economic conditions” on its financial position.

“The group does not intend or need to materially reduce the volume of operations,” management said.

Main image: Rough diamonds. (Alrosa)